Cadence Design Looks to Rebuild Leadership

The top brass is out at the design software maker.

Shares in the design software maker fell 55 cents, or 10.4%, to $4.75 in recent trading after the resignations of Cadence's top executives were announced earlier Wednesday.

The board is "going to have to rebuild the company," says independent industry analyst Gary Smith. "They're going to have to accept that ... they are just going to be a much smaller company."

The stock had tumbled 69% year to date after revenue began to shrink and its takeover bid for a rival failed. In July, Cadence revised its full-year revenue forecast to a range of $1.12 billion to $1.14 billion, from prior expectations for $1.49 billion to $1.54 billion.

The company said that Chairman John Shoven and board member Lip-Bu Tan would fill the executive void left by the resignations of President and CEO Michael Fister and Executive Vice Presidents William Porter, James Miller and R.L. Smith McKeithen.

CFO Kevin Palatnik will on as part of the interim executive group charged with managing the company until a new chief executive is found.

The company also reaffirmed prior guidance for revenue of $235 million to $245 million and a loss of 11 cents to 9 cents a share, excluding special charges, for the third quarter, which ended in September.

Cadence's board had been arguing for six months over the company's direction under Intel ( INTC) veteran Fister, Smith says. Fister joined the company as CEO in May 2004.